Do We Believe in Creative Destruction, or Not?

Over on Facebook, I saw my friend Jon Pasky’s post about Uber. Whether you like Uber or not, this concerns every start up, every financier, or anyone interested in seeing a start up ecosystem thrive in Chicago.

Victory Monument (Photo credit: Wikipedia)

If you don’t know what Uber is, it’s a cool phone application you can download and get a nice clean black car, taxi or SUV delivered right to you on time at a fixed rate. They already regulated them in Washington DC-the worst cab city in the country. The cab companies are after them in NYC. Now, it’s Chicago. Obviously, people like Uber’s service. It’s putting a dent in the livery companies profits.

Did we regulate Amazon ($AMZN) when it put bookstores out of business? Isn’t life better because of Amazon?

There are proposed regulations that would regulate Uber out of business when it comes to black cars.

“Collectively, these provisions are designed to prevent Uber’s technology from being used in Chicago limos. Their adoption would end Uber’s ability to offer the streamlined arrangement of limo transportation and ease of payment that you’ve come to expect and love. Consumer choice and accountability would be reduced and the incomes of the more than 1,000 Chicago drivers that depend on Uber would be significantly and negatively impacted.

It’s up to all of us to let city officials know the impact of these changes that would become final in a matter of days. We believe Chicago’s city officials will be receptive and responsive to our cause. Here’s what you can do:

More importantly, when it comes to start ups we need to embrace creative destruction. Certain start up businesses are going to put other businesses under. Competitive capitalism is like that. However, a thriving ecosystem will create more opportunity in the long run-providing a healthier business climate with more jobs.

Why can’t the black car services and taxi companies innovate? Shouldn’t more supply and competition equal more production and cheaper prices for everyone. In a typical free market system, it would. But not when things are regulated. This is a microcosm of events happening at every level of government regardless of party-although Democrats are more willing to legislate and regulate winners and losers more than Republicans.

Chicago already regulates the heck out of businesses. It’s really rough to start a mom and pop business. Mayor Emanuel has talked about getting a start up ecosystem going here. He has actively supported that system. Here is his chance to stop some silly regulations from putting a scalable start up that contributes a lot of cache to the local ecosystem out of business.

Myself, and many others have put a lot of our own money, blood, sweat and tears behind the dream of having a uniquely Chicago/midwestern entrepreneurial ecosystem. We are on the way to achieving that goal. 1871, The Coop, Catapult, angel groups, VCs, seed funds have all been participating and taking notice of what is going on here. It’s one of the few positive economic developments in the entire state that suffers from over 10% unemployment, passed a 67% tax increase and has billions in unfunded pension liabilities. The only way out of this mess is to grow our way out. More regulation isn’t going to put kindling under the growth fire.

Government can derail any previous efforts anyone made with stupid regulations, or worse yet-targeted regulations designed to protect existing businesses at the expense of innovative ones. I urge you to email the powers that be and let Uber be free to operate with no restrictions in Chicago. At the end of the day, it will be better for all of us.

If you are a start up anywhere in the USA, you ought to be outraged. You may be next. Write on their Facebook walls, and tweet at them. Sometimes when you build things, you have to take a stand. This is one of those times.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)

This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice.This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.